MOSL: LIC HOUSING FINANCE (Neutral)-Core home loan growth pick-up remains elusive
​LIC Housing Finance: Core home loan growth pick-up remains elusive
(LICHF IN, Mkt Cap USD4.7b, CMP INR599, TP INR680, 13% Upside, Neutral)
- LIC Housing Finance (LICHF) reported a weak set of numbers for 2QFY18. PAT declined 1% YoY to INR4.9b (8% below our estimates).
- Loan book growth was in line with the past trends at ~15-16% YoY, with retail loan book growth muted at 9-10% YoY. There was a slight shift in mix toward non-core loans. Loan book growth in LAP and builder loans continues to be in excess of 50% YoY.
- The biggest negative in the quarter was that calculated cost of funds did not decline. CoF was sequentially stable at 8.43% (but down 50bp YoY). This is quite high compared to the 2QFY18 CoF of peers like HDFC (7.55%) and IHFL (7.9%).
- With continued downward re-pricing of home loans, NIM shrunk 12bp QoQ and 50bp YoY (note that the YoY comparison is off a high base). Consequently, NII declined 4% YoY to INR8.9b.
- GNPL ratio was up 8bp QoQ and 23bp YoY to 0.8%, driven by higher GNPL in the corporate loan book. GNPL in the corporate loan book increased from INR4.7b in 1QFY18 to INR5.7b now. Note that 1QFY18 itself was a high base, with three builder loans amounting to INR1.2b slipping into NPL in that quarter. However, one of those three accounts was upgraded in the quarter.
LIC Housing Finance provides loans for purchase, construction, repairs and renovation of houses and flats to individuals, corporate bodies, builders and co-operative housing societies. Co.'s subsidiary is engaged in the business of setting up, running and maintaining assisted living community centre and care homes for senior citizens.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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